Navigating the maze of business insurance
It has been an eventful summer in the insurance industry with the introduction of the Insurance Act 2015 along with the news that 14,000 policyholders were affected after Gibraltar - based insurer, Enterprise Insurance was declared insolvent*. Both of these events will have an impact on commercial insurance buyers and should act as a reminder of the importance of making sound buying choices.
So what does all this mean for you?
As we mentioned in our last newsletter the Insurance Act 2015 brings about the biggest change in insurance contract law for more than 100 years and affects every commercial insurance policy placed, renewed or amended after 12th August 2016. The key changes for all commercial insurance policy holders are:
- The obligation to carry out a reasonable search for risk information.
- The requirement for clear and accessible presentation of this information.
The law has been updated to ensure that insurance contracts are fit for purpose.
In essence, policyholders may see fairer outcomes in the event of a claim, but only if they demonstrate an adequate approach to disclosing information about their risk to insurers before the insurance is agreed – in the form of the new Duty of Fair Presentation.
Whilst generally a positive step forward, if you do not comply with your new duties, insurers will have a new range of “proportionate remedies” which could include reducing your claim payments significantly. The good news is that the industry has been getting ready for the act for some time and we are equipped to help you comply with all the changes to your renewal process.
How can you make good, informed buying choices?
UK policyholders were left in an uncertain position in the summer when Enterprise Insurance went into liquidation with all claim payments immediately being put on hold. The impact of this on businesses and individuals is hard to measure in monetary terms but it is an undesirable position for all parties. It can be tempting to choose insurance based purely on price without too much thought to the provider, but when things go wrong this can prove to be a costly mistake.
Here are some steps you can take to minimise this risk and ensure that you are displaying good buying behaviours:
- Use an independent insurance broker who can call upon their knowledge and experience to recommend insurers with strong ratings and which are able to demonstrate solid financial stability.
- Work closely with that broker during the renewal process and indeed the lifetime of your policy, this way you can be confident they get to know and understand your business and the risks it faces. This will ensure that your business is underwritten on the correct basis.
- Make sure that you understand your policy and its’ warranties, limits and exclusions in order to ensure you are always protected.
- Communicate regularly with your broker, reporting incidents and possible claims at the earliest opportunity.
- Seek professional Risk Management advice, either from your Insurance Broker or a Risk Management company.
- Employ robust health and safety procedures throughout your business and regularly train and update your staff.
- Playing your part in the new process should lead to improvements across the industry which will ultimately benefit you, the policy holder with a more balanced, more efficient process.
*Insurance Business Magazine. http://www.insurancebusinessmag.com/uk/news/ breaking-news/14000-customers-to-get-refund-as- enterprise-insurance-shuts-down-35225.aspx